2018 (2) TMI 232 - AT - Service Tax

Refund claim of service tax paid - Renting of Immovable Property Services - for residential / accommodation purpose or otherwise - rejection on the ground that building that comprises of a lodging house also has a restaurant, banquet hall etc., and, therefore, would not fall within the meaning of hotel - whether appellants are eligible for the refund of service tax paid under the category of Renting of Immovable Property Service? - Held that - On perusal of the Lease Deed, we see that parts of the building have been specifically let out for payment of rent separately - It is seen that the Scheduled Property is rented out for running of Hotel, Lodging House and allied/related activities. The Restaurant, Coffee Shop etc., are facilities attached to the business of renting of Hotel. The Lease Deed reveals that rent for each part of the building or in other words, the Rent for Restaurant, Coffee Shop, Permit Room, Bar etc., are fixed separately. Only that part of the building which is used for accommodations would fall within the exclusion part of the definition. It is not the case that the restaurant coffee shop, permit room/banquet hall etc., are fully available only for the exclusive use of the lodgers, who stay in the hotel. It is also not the contention that these facilities are not open for use by those who do not stay in the hotel or for that matter that the hotel does not rent out including hall etc., for functions hosted by non-lodgers. Refund has been rightly rejected - appeal dismissed - decided against appellant.

Summary

Issues:
1. Eligibility for refund of service tax under the category of "Renting of Immovable Property Services."

Analysis:
1. The appellant leased a property for a hotel and paid service tax under "Renting of Immovable Property Services" from Jun. '07 to Sept. '07. However, they later realized that hotels might not fall under this category due to providing accommodation services.

2. The appellant argued that the entire building should be considered a hotel as it provides amenities like a restaurant, coffee shop, banquet hall, and permit room, essential for a hotel. They cited relevant cases to support their claim.

3. The Authorized Representative contended that only buildings used solely for residential purposes are excluded, and since the building in question provides services other than accommodation, it falls under taxable services.

4. The tribunal examined the Lease Deed, which specified different rents for various parts of the building, such as the lodging house, restaurant, coffee shop, banquet hall, and permit room. It was noted that the building was rented for running a hotel and related activities.

5. The tribunal concluded that the building was not solely for residential purposes but was used for hotel business, including lodging house and allied activities. The separate rents for different sections indicated the building's multifunctional use.

6. Referring to the lower appellate authority's decision, the tribunal upheld the rejection of the refund claim. It was determined that the property did not qualify for exemption under the relevant sections of the Finance Act, 1994, as it was partly used for business/commerce and partly for accommodation.

7. The tribunal emphasized that the entire property, including the sections used for business/commerce and accommodation, was subject to service tax. Therefore, the appellant's duty payment was deemed correct, and the rejection of the refund claim was upheld.

8. Consequently, the tribunal dismissed the appeal on the grounds of lack of merit, affirming the rejection of the refund claim for service tax paid under the category of "Renting of Immovable Property Services."

This detailed analysis provides a comprehensive overview of the judgment, covering the arguments presented by both parties and the tribunal's reasoning for rejecting the refund claim.